During the Year under review Net Profit before Tax decreased by 59.7% to 3.089b from 7.656b [restated] in the previous year. This was mainly attributable to increased transmission and distribution costs as a result of maintenance activities on the expanded network.
Electricity Sales grew by +2.3% 8.459m Units versus 8.272m unites.
Expanded Customer Base an improved average yield led to a +3.8% increase in sales revenue.
Fuel cost decreased by 485m [2.00%] due to improved energy mix following less utilisation of expensive thermal plants during the year.
Transmission and distribution costs increased by 14.1%. The rise was attributed to higher debtors provisions, depreciation due to increased capital investment and the rising cost of doing business
Finance costs increased +29.3% caused by use of short term borrowings to bridge cash flow shortfalls.
Co. recorded a -59.7% decrease in Net Profit before Tax decrease attributed to increase in transmission and distribution costs by 4.567b and a rise in finance costs by 1.767b
No dividend

Conclusions

Better than I expected. Cash and cash equivalents position remains a concern.

EPS declined by 30.2% yy to KES 1.50 in 1H18.
PBT reduced by -19%
Decrease was attributed to the general slowdown of the economy and an increase in financing costs.
Electricity Sales grew by 2.3% to 3,893 GWh
During the period under review there was increased usage of thermal generation as a result of poor hydrology.
Units generated from thermal plants increased by 416 GWh or 47% from 885 GWh to 1,301 GWh
This raised Fuel costs by 97.4%
Finance costs rose to 3.257b versus 2.281b

Conclusions

Its a very cheap share on a classic PE Analysis.
KPLC has been in the eye of the storm.

During the year under review, the net profit before tax decreased by 9.7% to Shs. 10,912 million from Shs. 12,083 million in the previous year. This was mainly attributable to increased transmission and distribution costs as a result of maintenance activities on the expanded network.
Electricity sales grew by 4.5% from 7,912 million units the previous year, to 8,272 million units in the period under review. This, combined with an improved average yield, led to 5.6% increase in sales revenue, from Shs. 87,081 million the previous year to Shs. 91,952 million.
Power purchase costs, excluding fuel and foreign exchange costs, decreased by Shs 784 million from Shs 51,400 million the previous year, to KShs.50,616 million. This is attributable to a reduction in units purchased from the hydro generation due to poor hydrology in the year and reduced geothermal generation in the year. The units purchased from hydro power sources and geothermal reduced by 13.2 percent from 3,787 GWh to 3,341 GWh and 3.4 percent from 4,608 GWh to 4,451 GWh, respectively.
Fuel cost increased by Shs 9,434 million from Shs 12,690 million the previous year to Shs 22,124 million due to increased usage of thermal sources during the year. Electricity units generated from thermal plants increased by 66.9 percent, from 1,297 GWh the previous year to 2,165 GWh.
Transmission and distribution costs increased by 16.6 percent from Shs 28,651 to Shs 33,417 million in the year. The rise was attributed to higher operational and maintenance costs on the expanded electricity network facilities, depreciation due to increased capital investment and the rising cost of doing business.

Conclusions

The Price Earnings ratio is less than 3.
The issue is the lack of share price performance.

Increase in Profit mainly attributed to increased sales and tariff review
Electricity Revenue grew 40%
Rise in unit purchases from 4,093 GWh to 4,320 GWh +5.5%
We are confident the Companys good performance will be sustained

To secure revenue, we are planning to introduce smart metering systems to enhance billing accuracy for large power customers as well as reduce overall costs, Chumo added.

Conclusions

Strong results helped by a Tariff Increase which raised the base Unit Price in favour of KPLC a while back.
Kenya Power has already increased the base tariff by 77% which is what has led to the significant margin improvement.

Full Year Earnings through 30th June 2014 versus 30th June 2013
Full Year Revenue 105.396b versus 88.909b +18.543%
Total Power Purchase Costs 72.640b versus 62.178b +16.825%
Full Year Gross Margin 32.756b versus 26.731b +22.539%
Full Year Transmission and Distribution Costs [22.683b] versus [20.984b] +8.0966%
Full Year Finance Costs [4.009b] versus [2.495b] +60.68%
Full Year Profit before Tax 10.198b versus 6.570b +55.22%
Full Year Profit After Tax 6.456b versus 3.445b +87.40%
Full Year Total Comprehensive Income 7.446b versus 4.712b
Full Year Earnings Per share 3.31 versus 1.76 +88.06%
Full Year Dividend 50cents versus 0.

Company Commentary

The Rise is due increased sales, Tariff Review and enhanced system efficiency
electricity Sales grew +9.8% combined with increased average yield led to +30.6% increase in Sales Revenue

The Lack of a Dividend Payment might impact the Price in the near term.
Finance Costs and 1.425b FX Gain in FY 2012 which was not repeated in FY 2013 also crimped Earnings.
There is a very Big Capex Program on the Horizon and the Question is how KPLC goes about funding that.
The Company had been looking to do quite a sharp Tarriff Increase but I think politically it is practically impossible.
Therefore, I expect some kind of aggressive Bond Issuance Program going forward.

Further Details via The Report and well worth Drilling into Breakdown of Gwh Supply versus Costs very interesting reading
http://www.rich.co.ke/media/docs/Kenya%20Power%20&%20Lighting%20Co.%20Ltd%20Half%20Year%20Results.pdf

Conclusions

The H1 PAT of +35.605% looks impressive at 1st Glance.
The Issue remains the Forward CAPEX Expenditure which is seriously chunky.
The Proposed Loading onto Consumers is simply not tenable.
KPLC will have to carry much more Debt on the Balance Sheet and smooth the Capex Cost.